Hill takes aim at obstacles to growth in Europe's capital markets

Proposals published by European Commissioner Jonathan Hill today are forward looking and seek to remove barriers to developing a vibrant capital market in Europe, Kay Swinburne MEP, European Conservatives and Reformists’ economics spokesman, said today. However, she warned that the commission’s proposals lay down the gauntlet for industry to take up the challenge of creating products that will get capital flowing throughout the EU.

The EU depends on banks for 75 percent of funds to grow its companies, making capital vulnerable to changes in bank balance sheets. The proposals published by Lord Hill today aim to encourage more funding to be forthcoming from other sources by focusing on removing obstacles that discourage private placements in the bond market, by boosting securitisation, or by making it cheaper for small companies to list on stock markets.

Dr Swinburne has welcomed the proposals as a crucial first step towards ensuring entrepreneurs and investors are able to release each other’s potential to grow the European economy. She said:

“These proposals are crucial to the long-term economic recovery of the EU. If the past five years were about new financial services regulations then the next five must be about removing barriers to kick-start investment, capital, growth and eventually new jobs.

“Lord Hill inherited a slogan, which he then had to find a policy to fit. He is absolutely right not to push for another centralising regulatory ‘solution’, but for simple and effective measures that will tear down obstacles standing in the way of both business and investors.

“In the EU we are reliant on banks for capital, leaving us vulnerable when banks decide to consolidate their balance sheets. There is money out there in Europe, but we need to find ways of unleashing it to drive the potential of our businesses and entrepreneurs.

“The benefits of these proposals to investors could be significant. Institutional investors want more investment securities, and Europe needs to harness people’s long-term savings.

“Lord Hill is right to not want to create a centralised Capital Markets Union, but to create the right conditions for a Capital Markets Union to thrive. Investors and businesses must do the rest and this paper by the commission should now be taken up as a challenge to industry.

“Across the EU we have some good examples of how non-bank capital is being used, but even in London we can do much more. From small start-ups to major infrastructure investors, the ideas being set out by Lord Hill will provide a series of easy wins that will finally focus on rebuilding our economies in the future. The euro zone’s woes, which have become all too present in recent weeks, will never be resolved until we start global capital flowing through Europe’s economy again.”